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Ad Valorem Taxation of Mineral Interests

John H. Tippit, Proceedings of 2nd Annual Rocky Mountain Mineral Law Institute (1956)

Ad valorem taxation of mineral interests, with reference specifically to mining, has long been a comparatively inactive phase of mineral law. One reason, of course, is that domestic mining itself was an ailing industry until World War II. Another is that new methods of taxation followed in the wake of the oil industryincluding severance, gross production, and allied taxeswhich reduced the importance of ad valorem taxation. And, except for support of local governments, ad valorem taxation comparatively is not the significant revenue-raising measure it was some years ago.

Recently, however, there has been renewed activity in metals. The reasons include the stimulus given by fissionable materials, recognition of domestic mining as a security factor, and price increases in base metals. In consequence, tens of thousands of new claims have been located on the public domain and many old claims are being re-examined and reworked. Some of these have demonstrated value; the remainder are objects of speculation. In either case, the claims are taxable in many states, and thus present a new and important source of revenue to local and state governments. Already taxing bodies have shown renewed interest in mining taxation in their efforts to meet increasing governmental costs. [436] It follows that lawyers are again sought for advice on mine tax problems.1